A flat organization (also known as horizontal organization or delayering) is an organization that has an organizational structure with few or no levels of middle management between staff and executives. The idea is that well-trained workers will be more productive when they are more directly involved in the decision making process, rather than closely supervised by many layers of management.

This structure is generally possible only in smaller organizations or individual units within larger organizations. When they reach a critical size, organizations can retain a streamlined structure but cannot keep a completely flat manager-to-staff relationship without impacting productivity.[citation needed] Certain financial responsibilities[which?] may also require a more conventional structure. Some[who?] theorize that flat organizations become more traditionally hierarchical when they begin to be geared towards productivity.

The flat organization model promotes employee involvement through a decentralized decision-making process. By elevating the level of responsibility of baseline employees and eliminating layers of middle management, comments and feedback reach all personnel involved in decisions more quickly. Expected response to customer feedback becomes more rapid.

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The "strong form" of a flat organization is an organization with no middle managers at all. Very small businesses may lack middle managers because there are too few staff to justify hiring middle managers; in this type of organization, the business owner or the CEO may perform some of the functions performed by middle managers in larger organisations.

However, some organizations do not take on middle managers even as they become larger, and remain extremely flat.

An organization which has self-managing teams, that organize their own work without the need for a middle manager or supervisor above the team, may meet or closely approximate this model. This can cause conflicts with people whose career path expectations include a promotion, which may not be available within the organization due to its flat structure. However, alternative "horizontal" career paths may be available, such as developing greater expertise in a role or mastery of a craft, and/or receiving pay raises for loyalty.[1]

An absence of middle managers does not preclude the adoption and retention of mandatory work procedures, including quality assurance procedures. However, due to the fact that significant responsibilities are given to the team members themselves, if a team collectively arrives at the view that the procedures it is following are outdated, or could be improved, it may be able to change them. Such changes may, in some cases, require the approval of executive management, and/or customers (consider for example a digital agency producing bespoke websites for corporate clients). If executive management is not involved in the decision, or merely rubber-stamps it, this might be an example of consensus decision-making or workplace democracy at the level of a team - or group of teams, if multiple teams are involved in the decision.

Examples of companies with self-managing teams include:

Qamcom Research and Technology, a Swedish specialist company with 60 employees active in the area of communication, radar and automotive systems (40% PhDs).

37Signals, which has rotating, not permanent, team leaders.[1] Some other digital agencies also use rotating team leads.

Valve Corporation, which also has rotating, not permanent, team leaders - which Valve terms "group contributors", in recognition of the fact that contributing individually and leading at Valve form a spectrum, not a binary dichotomy.[2] Generally the term of a group contributor at Valve is at most one project, after which time they (voluntarily) rotate back to being an individual contributor.[2] Valve also allows team members to work on whatever they find interesting. This is known as open allocation, and means that employees can switch to another team at any time, no questions asked; all desks are on wheels to make this easy.[3] However, because new ideas may require significant resources, someone with a new idea may need to persuade a number of their coworkers to join them in order to create a new team and reach the necessary "critical mass" for the new idea to come to fruition.[3]

Valve's cofounder has admitted that it has issues with failing to catch bad decisions early on due to a lack of internal controls, due to its lack of managers.[2]

Prof. Cliff Oswick from Cass Business School, who has studied Valve and other examples of "non-leadership", believes that Valve works because it hires high-calibre people who are a good fit for the leaderless environment, and because it was founded as a flat organization from the outset, so that new hires always knew what they were getting into.[3] However, he warns that the peer-review-based stack ranking system Valve uses for determining employee remuneration, might become problematic if in the future Valve becomes short of cash.[3]

In technology, agile development involves teams self-managing to a large extent (though agile development is commonly still practised within a hierarchical organization, which means that certain types of decisions such as hiring, firing, and pay rises remain the prerogative of managers). In scrum, an agile methodology, team members assign work to be done among themselves, either by free choice or by consensus. The scrum master role in scrum is not a management role as such, but is a role that involves helping to remove obstacles to forward progress, and ensuring that the basic scrum framework is adhered to by all parties, inside and outside the team - both aspects of the role being more akin to facilitation than to top-down micromanagement. Agile methodologies such as scrum have also begun being used in non-technology companies and organizations.

Drawing on the famous essay The Tyranny of Structurelessness, Klint Finley has argued that "bossless" companies like GitHub and Valve might suffer from problems related to the appropriate handling of grievances, the formation of informal cliques, the "soft power" of popular employees, unprofessional and sexist attitudes, and lack of workplace diversity.[5] However, some of these topics are the responsibility of human resources departments in larger organisations, so it is possible that an effective HR department could resolve these issues within a flat organization. Finley does also say that "Borderless collaboration and a non-authoritarian workplace are great goals to strive for".